Pursue LDT Revenue Cycle Success with Cross-functional Collaboration

In many traditional lab organizations, the scientific product development group has historically produced new diagnostic tests without meaningful input and consideration of payer policy and revenue cycle demands. But what if the lab were to begin considering the needs of the revenue cycle even earlier? What if revenue cycle considerations were included in the lab’s decision-making about test development and commercialization? How could collaboration between the lab and its revenue cycle group help improve financial performance? Labs who integrate revenue cycle management considerations into new test development have a higher chance of reimbursement success and achieving profitability.

Bringing the revenue cycle and the lab together.

Labs who consider revenue cycle issues at all stages from the beginning of the test development through deployment and billing, are able to gain synergies and successfully implement a cohesive commercialization strategy. Collaboration between sales, marketing, laboratory personnel, and other stakeholders is key, especially for lab’s developing and launching novel diagnostic tests. When information flows both ways, the development team provides the necessary information to help the financial team make revenue and volume forecasts that are more realistic. Conversely, feedback to the lab that considers the existing medical payer policy environment, clinical utility guidelines, and revenue cycle demands can potentially lead to development of more commercially viable tests.

How the lab benefits from collaboration.

Scientific advisors of the laboratory have expertise in a molecular testing technology, modality, or other unmet healthcare needs that would lend itself to development of a new test. Many laboratories spend their R&D budget on new assay development without fully understanding the reimbursement environment for the test they are developing. Early revenue projections may be overly optimistic, and may not account for limited payer coverage for the test.

A new test that may prove “popular” with clinicians may bring in a large volume of business, but if reimbursement rates are low or result in greater patient cost-share, the financials of that test may not be beneficial to the lab. The ability to identify which tests, patient populations, providers, and payers perform best financially, and which do not, can help guide the laboratory in test development decisions. With a cross-functional team—commercial, marketing, revenue cycle, finance, and payer relations/market access—input from both lab management and those responsible for financial operations can influence R&D direction.

How the revenue cycle benefits from collaboration.

Marketing and sales teams must differentiate a lab’s new test from other treatment options, so that physicians will deem it clinically necessary for their patients. Communications need to be developed to inform physicians, patients, and payers as to the use and benefits of the new test.

When the lab comes together with its revenue cycle during test development, the cross-functional team can methodically address the following questions and capture the necessary data needed for commercialization communications. If the payer will not pay for the test, what evidence must be developed to secure positive coverage and what is the timeline for developing such evidence? What is the marketing message and will it need to include specific intended use guidelines? What pre-test requirements (e.g. medical policies, prior authorization) will exist for the test? What is the appeal strategy? What is the patient billing strategy? What is the institutional/client billing strategy?

When cross-functional collaboration is limited or lacking, what are the associated risks?

If different teams within a lab are not collaborating, the unintended consequences can be high costs and minimal revenue. Demonstrating clinical relevance can suffer, and insurance companies may choose to either not cover the test or cover it with many restrictions and with sub-optimal reimbursement.

When collaboration is lacking or limited, objectives within the lab may become misaligned. Sales might offer resistance to billing and finance, trying to balance gaining market traction and order volume against accepting samples that may not meet the clinical criteria for reimbursement. Investors and senior management may focus too early on driving revenue, versus evidence development. In its pursuit of growth and volume, the laboratory’s organization may hire a large sales team to drive utilization well before the evidence is ready to support broad coverage and reimbursement.